Just six months ago, Global Road Entertainment executives boasted at the Berlin Film Festival that they planned to pour $1 billion into production budgets over the coming three years.
But that ambitious claim appeared to come almost literally to naught this week with news that parts of Global Road’s U.S. operations had been taken over by the company’s financial backers. Staff members were told at an all-hands meeting Tuesday that their U.S. domestic production and distribution operations were flirting with bankruptcy. (The U.S. television and film sales divisions were not immediately affected.)
The crash is a major blow to high-flying executive Donald Tang, whose privately held company, Tang Media Partners, owns Global Road. Now, some are asking how much capital TMP ever had in the first place, despite its ambitious announcements and acquisitions, and who the backers are who have asserted control over Global Road operations in the U.S.
Some of that puzzlement extends to his own employees, at least those based in China, TMP’s other main center of operations. Although Tang has always insisted that his TMP is a U.S.-based enterprise, in recent months he has elaborated a so-called “dual core” strategy embracing both Hollywood and China – a strategy that has not been a success for companies such as Dalian Wanda, Relativity Media, Dreamworks and CMC.
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The financial woes hitting Global Road in the U.S. have apparently not been felt in the company’s operations in the Middle Kingdom – yet. Those operations include a small team handling film distribution and marketing. One of its few releases was the June outing of hit Indian film “Toilet: A Love Story.” Another team handles film and TV project development.
“We have not been told anything – only that it is business as usual,” said one TMP executive in China, speaking on condition of anonymity. But a former China-based staffer said that concern over the group’s overall finances motivated his decision to quit earlier this year.
Neither Tang nor TMP’s COO, Kevin Kang, who has offices in L.A. and Shanghai, responded to a request for comment.
Notably, the identities of the financiers – the lenders and equity investors – involved in the management takeover of Global Road in the U.S. were not disclosed. Tang has not publicly named all of TMP’s backers or their ownership positions.
But among those reported as having a stake are Chinese film studio Huayi Brothers, venture capital firm Sequoia Capital, and entertainment industry investor China Media Capital.
Tang has often named Chinese social media and games giant Tencent as one of his core backers – Tencent also hatched a TV production deal with IM Global, which was folded into Global Road – but many in the Chinese industry have suggested that Tencent’s investment in TMP is small, even tokenistic, and that the company did Tang a favor by lending its name and credibility.
In recent months, Tang has also named Chinese finance firm Everbright as an investor. Everbright did not respond to e-mails from Variety. Another possible investor is Reliance Entertainment, the Indian firm that sold TMP its controlling stake in IM Global in 2016.
The purchase of IM Global is believed to have cost about $200 million. AMC reported that its sale of 50% of Open Road netted it $28.8 million, pointing to a purchase price north of $50 million.
After Global Road told film executives in Berlin in February of its plan to put $1 billion into production, it became clear that the company did not have that kind of money available when it appointed boutique finance house Moelis & Co. and Wall Street heavyweight Morgan Stanley to help raise $200 million of equity capital.
At an investor presentation by TMP in Hong Kong in late April, Global Road chairman and CEO Rob Friedman told Variety that the bankers were still working on the equity issue, and that Global Road’s planned production slate would separately be funded with debt.